MINUTES OF THE MEETING of the MICHIGAN STATE UNIVERSITY FINANCE COMMITTEE January 9, 1973 President Wharton called the Finance Committee meeting to order at 7:15 p.m. in the Heritage Room, Kellogg Center. The following members were present: Trustees Carrigan, Huff, Martin, Merriman, Radcliffe, Stack, Stevens, and Thompson; President Wharton, Executive Vice President and Secretary Breslin, Vice Presidents Wilkinson and Scott, Provost Cantlon, Assistant to the President Ballard, Attorney Carr. Absent: No one. 1. President Wharton and Vice President Wilkinson reviewed for the Trustees the previous work of the Audit Committee. President Wharton indicated that Trustee Thompson and Trustee Martin were current members of the Audit Committee and could be reappointed should the Board so desire. I Trustees Martin Sand Thompson {reappointed to iAudit Committee Motion was made by Trustee Stevens, seconded by Trustee Merriman, to reappoint Trustees Thompson and Martin to the Trustee Audit Committee. Unanimously approved. Trustees Stevens and Merriman pointed out that there were no other active committees of the Board, all other Board committees having been disbanded. 2. President Wharton indicated that it would be necessary for the Board of Trustees to choose four of its members to serve on the MSU Foundation Board of Directors. Trustees Carrigan, Huff, Stack, and Thompson were selected. It was also agreed that a rotation system would be worked out so that all of the Trustees would have an opportunity to serve on this Board. On motion of Trustee Stevens, seconded by Trustee Radcliffe, the appointment of the above Trustees to the Foundation's Board of Directors was approved, along with the establishment of a rotation system whereby all will have an opportunity to serve on the Board before the end of their terms as Trustees. 3. President Wharton reviewed the reason for the establishment of the annual Trustees1 Distinguished Citizen Awards. He indicated these awards were designed for people who would not normally be awarded honorary degrees by the University and would primarily be awarded to Michigan citizens who had contributed long and distinguished public service within the state. After discussion, it was suggested that a two-person committee be established to review possible candidates for the Trustees1 Awards. It was suggested that the committee come in with three names from which the Board would select two. It was further agreed that the administration would furnish background information on all possible candidates. On motion by Trustee Huff, seconded by Trustee Merriman, the committee of Trustees Stevens and Thompson, as well as the selection procedure, were approved. Trustees I Carrigan, Huff, I Stack, Thompson I appointed to MSU jFound, Board of jDir.; rotation ^system to be ^developed iTrustees Stevens ;and Thompson ^appointed to I identify candid- ates for Trustees Distinguished Citizens Awards 4. It was recommended that the Trustees approve an additional $21,000 to be paid to Robert H. Hayes and Associates, Inc., of Chicago, to cover the cost of the complete A-P study. This recommendation was made because the scope of the study is greater than originally anticipated. Approval addi- tional $21,000 appropriation jto complete A-P Study RESOLVED that an additional $21,000 be paid to Robert H. Hayes and Associates, Inc., to cover the cost of the complete A-P study. Unanimously approved. Motion by Trustee Thompson, seconded by Trustee Stevens. 5. It was recommended that Michigan State University sell to the Michigan State Department of Highways a narrow strip of land along Michigan Avenue from the Beal Street entrance to Harrison Road. The Highway Department needs this land so as to provide a bus lane for the University buses as requested by us, as well as to provide space for the sidewalk on the south side of the east-bound lane. This amounts to 2.1 acres of land and the Highway Department will pay ttie University $100. ^Approval sale of strip of land I along Mich. Ave« jto State Highway iDept. RESOLVED that the Board of Trustees approves the sale of the strip of land as described above to the Michigan State Department of Highways for the sum of $100. Unanimously approved. Motion by Trustee Thompson, seconded by Trustee Merriman. I I I I I 7654 Commencement Speakers for 1973 commence- ments; Honorary degree awardees for March 1973 commencement Approval Pres. \ Wharton1s appointment to \ Board of Dir- ectors of . Ford Motor Co. ; Burroughs Corp.; Agricultural Development Council Finance Committee Minutes, continued January 9, 1973 President Wharton presented his recommendations for commencement speakers for the March 1973, June 1973, and December 1973 commencements, as well as the honorary degree awardees for the March commencement. March 1973 Speaker: Nancy Hanks (alternate - Barbara Ward)* Chairman, National Endowment for the Arts Public: Peter B. Clarke Publisher, Detroit News Alumnus: William H. Sewell Professor of Sociology University of Wisconsin Scholar: William R. Mann* Dean, School of Dentistry University of Michigan June 1973 Speaker: Thurgood Marshall (alternate - Walter Cronkite) December 1973 Speaker: James Reston Vice President, New York Times -Already approved On motion by Trustee Huff, seconded by Trustee Merriman, the above recommendations were approved unanimously. 7. In the next order of business, President Wharton reviewed with the Board of Trustees his external commitments and the guidelines which he had set with the Board establishing a ceiling on the maximum number of such commitments, with no subsequent additions or replacements without Board approval. Thus, prior to assuming office, he resigned from some twelve boards and committees. During the past three years, President Wharton indicated that he had requests to serve on various boards — 10 major corporations; 7 Federal Commissions and Committees; 11 educational institutions and agencies; and 14 foundations, research and civic organizations. For various reasons, including the policy cited above, he did not accept these offers, although he did discuss these with the Trustees from time to time. He explained that his general philosophy regarding such external commitments is that his exclusive relationship is with Michigan State University and that his external activities in any new areas should bear a direct beneficial relationship to the institution. Therefore, if in the Board1s judgment such service would be to the advantage of the University, then he would accept; if not, then he would decline. Further, he believes that consideration should be limited to firms within the state for obvious reasons. President Wharton indicated that he had recently received three additional inquiries, all of which are within the state of Michigan, and one or two of which he was inclined to accept provided the Board concurs and that appropriate substitution of existing commitments is made. He, therefore, requested the guidance from the Board of Trustees on his possibly accepting a position on one or more of these boards. The ensuing discussion indicated that the Board of Trustees believed that President Wharton should accept the invitation from the Ford Motor Company of Dearborn, Michigan, and Burroughs Corporation of Detroit, Michigan. The Ford Motor Company is one of the leaders in the automobile industry and its activities are of vital concern to the economic health of the state of Michigan, as well as being international in scope. Particularly in view of the many public interest issues faced by the company, including such matters as automotive and plant pollution, safety, and non-discriminatory employment policies. They believed that President Wharton could make a useful contribution in the public interest, as well as in the interest of the company itself, in serving as a director. It was noted that President Fleming of the University of Michigan has accepted a directorship with Chrysler Corporation, and if only from a competitive institutional standpoint, Michigan State should be equally well represented. Similar arguments were advanced in the case of Burroughs as a leading science-based Michigan industry. From the standpoint of the matters which President Wharton would be engaged in, his position as President of Michigan State University and as Director of Ford Motor Company, and of the Burroughs Corporation, the Board expressed the view that there clearly would be no conflict of interest. In addition to such public service as he might render, serving on the companyfs board should also be useful in helping to keep the University in touch with all facets of the community, and in giving visibility to the University's interests and concerns in the business community. i i i i i 7853 Board member- ships for Pres. Wharton, cont. Finance Committee Minutes, continued January 9, 1973 7. Board Memberships for President Wharton, continued The MSU Board has established general University policy under which no more than two days a month can be spent by a faculty member on consulting or other personal business activities. It was recognized, however, that some members of the Board of Trustees have expressed concern over extensive outside activities with corporations* It was felt that the amounts of directors' fees paid by corporations, which may be proportionately large in relation to University salaries, could give a possible appearance of conflict between an individual's responsibilities to the University and his duties to the corporation. This matter has been considered by the University Attorney, Mr. Leland W. Carr, Jr., who has advised that under the power vested in the Board of Trustees by the Michigan Statutes, it would be within the direction of the Board of Trustees to impose, as a condition upon President Wharton's acceptance of the directorships with Ford Motor Company and with Burroughs, he not receive any director's fees or other compensation from the company for services as a director. Counsel further advised that the imposition of such a condition would protect the interests of the University against any possible appearance of a conflict of interest, and at the same time would preserve to the University the advantages of having its President serve as a director of these companies — from the standpoint of the benefit to be gained in keeping abreast of affairs in the business community and serving the general public. In fact, serving without receiving personal gain from such fees would enhance President Wharton's ability to genuinely serve the public interest. University Attorney Carr has further advised that service on such boards would not constitute a conflict of interest under Act 318, Public Acts 1968. This act stipulates that there is a conflict of interest when a state officer has personal interest of such substanace as to induce action promoting the contract. In the present instance of relationships between the University and the two corporations, and the precise conditions of President Wharton's proposed relationship to these boards, in Attorney Carr's opinion there is no substantial interest as would establish a conflict of interest. Therefore, it was the consensus of the Board of Trustees that the Board should approve President Wharton's acceptance of the directorships of Ford Motor Company and the Burroughs Corporation, and that the MSU Board of Trustees should stipulate as a condition in President Wharton's agreement with the University that he shall have no right to receive any director's fees or other compensation whatever from these companies for his services. In so doing, the Trustees also expressed the view that in order to compensate the University for the time devoted by the President in carrying out his duties as a director of these companies, the University should enter into an arrangement with the Ford Motor Company and with the Burroughs Corporation under which these companies would pay directly to the University, for its unrestricted use, an amount equivalent to any director's fees which, in the absence of the imposition of the above condition, would have been paid by the company to the President as a director. Finally, President Wharton reported that he had received an inquiry from his old organization, the Agricultural Development Council, to join their board. For obvious sentimental reasons, he would like to accept and would do so again with the appro- priate substitutions. The Board concurred. Whereupon Trustee Thompson moved and Trustee Stevens seconded the following resolution: Whereas, the President of the University, Dr. Clifton R. Wharton, Jr., has requested the Board of Trustees to consider the question of his acceptance of a position as a member of the Board of Directors of Ford Motor Company, Dearborn, and of the Board of Directors of Burroughs Corporation, Detroit, Michigan, while he continues to serve as President of the University, and Whereas, in order to avoid any possible appearance of conflict between Dr. Wharton's responsibilities to the University and his duties to Ford Motor Company and to the Burroughs Corporation, as a director of those corporations, the Board of Trustees, under powers invested in it pursuant to Statutes of the State of Michigan for the government of Michigan State University, desires to impose certain conditions upon Dr. Wharton's acceptance of the directorships at Ford Motor Company and at Burroughs Corporation. RESOLVED, that the Board of Trustees hereby approves the acceptance by Dr. Wharton, President of the University, of a position as a member of the Board of Directors of Ford Motor Company and of the Board of Directors of the Burroughs Corporation, subject, however, to the condition in his agreement with the University that Dr. Wharton shall have no right to receive any director's fees or other compensation whatever from Ford Motor Company or from the Burroughs Corporation in consideration for his services as such a director, other than reimbursement of actual expenses connected with his attendance of company meetings, so long as he remains in the employment of the University and this resolution remains in effect, and I I I i i Board member- ships for Pres. Wharton, cont • Finance Committee Minutes, continued January 9, 1973 7. Board Memberships for President Wharton, continued FURTHER RESOLVED, that the University shall enter into appropriate arrangements with Ford Motor Company and the Burroughs Corporation under which the companies shall pay directly to the University an amount equivalent to all directors1 fees and any other compensation which would, in the absence of the conditions imposed by these resolutions, have been payable by these companies to Dr. Wharton as such director, and FURTHER RESOLVED, that the appropriate officers of Michigan State University, and Mr. Leland W. Carr, Jr., University Attorney, shall be and they hereby are authorized and directed to implement and carry out all of the provisions of the foregoing resolutions, including the negotiation and execution of any contracts, agreements, and other instruments that may be appropriate or desirable for this purpose. Finally, that the Board approves the acceptance by Dr. Wharton of a position as a member of the Board of Directors of the Agricultural Development Council. Passed unanimously. i Clarification of President Wharton1s position re grievance filed; by Prof, Bob F.; \ Rep as | 8. President Wharton reviewed the grievance filed by Professor Bob F. Repas. The President indicated that he could not be involved in this grievance because the grievance would finally come to him for action under Section 5. After discussion, on motion by Trustee Huff, seconded by Trustee Carrigan, it was unanimously voted to approve the following letter which President Wharton was authorized to send to Professor David J. Kallen clarifying the Presidentfs position relative to this grievance. Dear Professor Kallen: I have received your letters of January 2 and January 8 which report that Professor Repas has sought to name me as a party to his grievance concerning the selection of the Faculty Grievance Officer. These letters have been reviewed with the MSU Board of Trustees to clarify their intent in adopting these procedures. Their review established that, without judging the merits of his grievance, my involvement at this level of the grievance procedure is not appropriate for the following reasons. First, since the Faculty Affairs and Faculty Compensation Committee advises the Provost on appropriate academic matters and he in turn takes the initial administrative action before submission to me, it appears that his availability at this stage is all that is necessary. Further, since the final resolution of all grievances under the Interim Faculty Grievance Procedure rests with the President (see 5.), any premature entry into the procedure would jeopardize due process as intended. I have, therefore, requested the Provost or his designee to be available for the hearing on this grievance. Sincerely, Signed: Clifton R. Wharton, Jr. Univ. attorney asked to submit review of Univ. grievance procedures 9. The Board of Trustees indicated great concern over the current grievance procedures of the University because of much overlapping and duplication.. The Board asked the University Attorney, Mr. Leland W. Carr, Jr., to submit to the Board a complete review of the University's grievance procedures. The above action was unanimously authorized on motion by Trustee Merriman, seconded by Trustee Huff. Meeting adjourned. President Secretary